Collusion in a Bertrand duopoly model with decreasing returns and product differentiation
Contreras-Marin, R., Georgantzis, N. and Gines, M. (2008) Collusion in a Bertrand duopoly model with decreasing returns and product differentiation. Estudios de Economia, 35 (1). pp. 19-31.
Official URL: http://www.estudiosdeeconomia.cl/publicacion/show/...
We study cartel stability in a differentiated price-setting duopoly with returns to scale. We show that a cartel may be equally stable in the presence of lower differentiation, provided that the decreasing returns parameter is high. In addition we demonstrate that for a given factor of discount, there are technologies that can have decreasing returns to scale where the cartel always is stable independent of the differentiation degree.